EconSurvey
Food prices may soften in Apr-Sept, core CPI outlook benign
This story was originally published at 14:54 IST on 31 January 2025
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--EconSurvey: Food inflation likely to soften Jan-Mar on seasonal factors
--EconSurvey: Food prices seen contained in H1 FY26 on good rabi output
--EconSurvey:Core CPI outlook benign on soft global energy, commodity prices
NEW DELHI – India's food inflation is likely to soften in the first half of 2025-26 (Apr-Mar) on account of robust rabi output, the Economic Survey for FY25 said on Friday. According to the Department of Agriculture and Farmers' Welfare, India's rabi sowing was 1.9% higher as of Monday.
India's food price inflation has been close to 9% for the last four months, with a 14-month high of 10.87% in October. But this is likely to come down in Jan-Mar as well due to seasonal easing in vegetable prices and the arrival of the Kharif harvest, the survey said. The Reserve Bank of India has projected a 4.5% CPI inflation in Jan-Mar.
"Improved agricultural prospects bode well for softening of food inflation pressures over the course of the year," the survey said. "The risk to inflation from increases in commodity prices seems limited in 2025-2026," the survey said.
The core inflation outlook is also benign, according to the survey, on account of softening energy and commodity prices. "However, risks remain on account of significant global political and economic uncertainties," the survey said.
A huge part of global political and economic uncertainties emanate from US President Donald Trump's trade policy. The Republican Party leader has threatened to impose high tariffs on countries that have a trade surplus with Washington, especially targeting India, China, Mexico, and Canada. A possible protectionist measure by the US may lead to higher energy prices.
But India's foreign exchange reserves are sufficient to cover 90% of external debt and provide an import cover of more than 10 months, thereby safeguarding against external vulnerabilities, the survey said. India's foreign exchange reserves were $629.98 billion as of Jan. 17. End
US$1 = INR 86.65
Reported by Krity Ambey
Edited by Akul Nishant Akhoury
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